The Union Budget 2026 has been presented with a clear focus on infrastructure development, manufacturing boost, and fiscal consolidation. As investors digest the announcements, it's crucial to understand the sectoral implications and adjust portfolios accordingly.
Key Budget Highlights
- Capital expenditure allocation increased by 15% to ₹12.5 lakh crore
- New PLI schemes announced for semiconductors and green hydrogen
- Personal income tax slabs revised with higher exemptions under new regime
- Long-term capital gains tax structure remains unchanged
- Fiscal deficit target maintained at 4.5% of GDP
Sectors to Watch
Infrastructure and capital goods sectors are clear beneficiaries with the increased capex push. Railways, defense, and green energy companies should see order book improvements. The PLI extension benefits manufacturing stocks, particularly in electronics and EV components.
Banking and Financial Services
The fiscal discipline message is positive for bond markets. Lower borrowing costs help banking margins. PSU banks may see continued government support, while private banks benefit from credit growth projections of 13-14% for FY27.
This budget strikes a balance between growth and fiscal prudence. The focus on manufacturing and infrastructure creates a multi-year investment theme for Indian equities.
Investment Strategy Post-Budget
- Overweight infrastructure, capital goods, and defense sectors
- Accumulate quality manufacturing stocks on dips
- Banking sector remains attractive at current valuations
- FMCG may see near-term pressure but offers value for long-term
- Consider SIPs in diversified equity funds to capture the capex theme
While short-term volatility is expected as markets digest the fine print, the structural story for Indian equities remains intact. The budget reinforces India's position as a manufacturing hub and infrastructure growth story.